Congress may be in recess this month, but healthcare reform efforts aren’t taking a vacation.
President Obama has made reforming the country’s $2.5 trillion healthcare system one of the top priorities in his first term, arguing that fixing the system is critical to long-term economic health.
The healthcare overhaul could cost $1 trillion during 10 years and will require new obligations on Orange County residents and businesses.
If passed as now constituted, reform would set up a government-run “public option” plan to compete against health insurers, something that Congress’ Republican minority calls a government takeover.
The Senate Finance Committee is looking at a bipartisan compromise that would set up nonprofit cooperatives to bring in an element of competition.
Other elements of healthcare reform include requiring Americans to buy health insurance, helping people who can’t afford to buy it and obliging most large and many small businesses to contribute to healthcare costs for their workers.
In addition, health insurers would be banned from charging more or declining to cover people because of their medical histories.
Obama’s plan has run into some industry pushback. Health insurers are pouring lobbying dollars into fighting sweeping changes. And even Democrats, who hold the majority vote, are arguing among themselves on how to pay for it.
Business Journal healthcare writer Vita Reed asked a selection of Orange County health experts to share their thoughts on what might come of healthcare reform and how whatever may be ultimately done would affect the county’s residents. An edited version of their responses follows.
PAUL FELDSTEIN
Robert J. Gumbiner Professor, the Paul Merage School of Business, University
of California, Irvine
If healthcare reform is enacted, it will be phased in, and the in-creased number of people with health insur-ance will expand the demand for physician services. Given the limited number of primary care physicians, the excess demand for physicians will result in access problems and encourage more physicians to charge a “concierge” fee.
Those on Medicare (as well as others) will experience decreased access since the increased demand for physicians will either cause increased waiting or require a fee to see the doctor first.
An employer and an individual mandate will provide insufficient private funds to pay the medical costs of all those who are eligible. Subsidies will have to be provided to those with low incomes. As in Massachusetts, the subsidies will be insufficient to pay for the rising medical costs of all those eligible for subsidies.
The government will then have to reduce hospital and provider payments, in addition to raising taxes, further expanding the federal deficit.
The Democratic bills contain no true cost- containment measures; incentives of patients and providers will not be changed. Thus regulatory measures will be used to limit cost increases.
Whether healthcare reform occurs, the rate of increase in Medicare and Medicaid (Medi-Cal) hospital and physician payments will be reduced. The Medicare Trust Fund, which is funded by a payroll tax, is going bankrupt by 2017, and together with the federal deficit, which funds physician and outpatient services and prescription drugs, has a deficit of $66 trillion.
Fixing Medicare will require sacrifices from providers, taxpayers and the aged.
BARRY ARBUCKLE
Chief executive
Memorial HealthCare Services, Fountain Valley
What a difference six months make. While most believed it unlikely to experience substantial healthcare re-form any time soon, President Obama has made remarkable progress on a very complex issue.
Even though we will need to wait until after the August Congressional recess, movement is likely, especially among the uninsured.
The number of California’s uninsured and underinsured,totaling nearly 14 million,means nearly half the state struggles to access needed services.
OC’s uninsured in 2008 reached 241,000,9.1% of adults and 3.5% of children. That number will grow as job losses are expected to reach more than 100,000 in 2009-10 from the 2008 average of 5.4% unemployment to 9.7% by 2010.
While OC’s unemployment is lowest in Southern California, job losses mean more uninsured.
Many of OC’s uninsured are not provided coverage through their employer and cannot afford premiums. However, a large number that can afford insurance opt out,the young invincibles and those simply choosing against coverage.
The majority receiving coverage through employers will see little change with a reform plan. Premiums are not likely to drop nor will the pace of increases lessen significantly.
To the degree government reduces Medicare or MediCal reimbursement (hospitals lose 22 to 40 cents on the dollar respectively), providers will continue to be forced to cost shift to the privately insured or join the 20 OC hospitals closing during the past dozen years.
Other reform package elements may include requiring health plans to offer a basic coverage option, greater limitations on who can be refused coverage, competitive pricing on prescription drugs and regional variations in how care is provided.
MICHAEL HURWITZ
General surgeon, Newport Beach
President, Orange County Medical Association, 2009-10
The Orange County Medical Association maintains that there is a great need to cover the uninsured and expand the choice of health insurance. Our policy does not support single payer but believes that we need a viable, effective approach to ensure universal health coverage.
Healthcare reform at the federal level will hopefully address issues surrounding insurance companies denying and rescinding coverage, allow people to take their employment-based coverage with them upon leaving or moving to a new job and lower premiums for all.
Additional coverage will keep people out of overcrowded emergency departments and allow patients to continue to see their primary care physicians. It will help doctors recover costs for treating patients, reduce the burden of preventable disease, simplify administrative burdens and maintain and improve the doctor-patient relationship.
In OC, specifically, many believe that having no health insurance is not an issue. This could not be further from the truth. The county’s Medical Services for the Indigent program has grown significantly in the past two years and the number of patients has more than doubled in the past three years.
Requests for specialty referrals for the indigent enrolled in this program have increased by 250% in the last three years.
In the mainstream population, massive layoffs in the local mortgage industry, building industry, education and other local industries have widely contributed to the uninsured. OC now has nearly 9% unemployment and many people choose not to continue their insurance through Cobra due to its high cost.
Others choose to go without insurance for various reasons due to lack of competition among health insurers, high costs or personal priority in their family budget.
Primary care physicians are having major challenges keeping their practices open due to nonpayment or very low payments from insurance companies. Specialty care is often denied or paid at rates lower than 20 years ago.
Healthcare reform needs to give serious consideration to managing costs through a more efficient delivery system, less administrative burdens for doctors and patients, and less administrative costs and profits among insurers by increasing coverage to spread the risks and allow for shared responsibility among all involved.
CHRIS DE ROSA
Vice president,
General Manager of Southern California
Cigna HealthCare of California
We fully support the president’s goal of expanding access, controlling costs and improving the quality of healthcare.
The industry has already put forth a plan that guarantees coverage for everyone including for people with pre-existing conditions, strengthens the safety net and provides subsidies for those who can’t afford it, without adding to the debt burden of the country.
Therefore, we don’t see the need for a government-sponsored plan.
Americans will ultimately be the ones negatively impacted by a government-sponsored plan because it is fiscally irresponsible, will turn back the clock on quality, threaten patients’ access and choice and worsen the existing cost shift between individuals on a government plan and those on employer-sponsored plans. With the many thousands of individuals in the OC area with employer-based healthcare, this kind of government-sponsored plan will threaten that coverage.
More than 165 million Americans, including thousands in OC, rely on employer-provided healthcare coverage. Every survey of consumers who have private coverage shows very high satisfaction.
An independent analysis by the Lewin Group found that 18.6 million employees would lose their private coverage and be forced to join the new government-run health plan (if Obama’s reforms go through).
We expect consumers will reject proposals that could put at risk their employer-sponsored coverage.
A new government-run health plan would exacerbate the already devastating impact of cost shifting from public health insurance programs to consumers and employers in the private sector. Doctors and hospitals across the country and within OC say that public health insurance programs pay them less than it costs to treat their patients.
These underpayments to doctors and hospitals in public programs impose a hidden tax of more than $1,700 on consumers and employers across the country and nation who therefore end up paying significantly higher premiums.
JULIE MILLER-PHIPPS
Senior vice president, executive director
Kaiser Permanente,
Orange County
Kaiser Permanente is a strong supporter of national health reform. We believe reform should encourage the care coordination, medical record connectivity and preventive services. If healthcare reform is done right, it will have positive effects for both the insured and uninsured residents of OC.
Well-designed healthcare reform should make healthcare costs more affordable and your coverage more portable. Right now, about 10% of healthcare costs paid by those with private insurance are actually due to costs incurred by the uninsured, which is in turn shifted to the insured. When all Americans have health coverage, this so-called “hidden tax” will be mitigated.
In addition, healthcare reform will offer protection and peace of mind for those who may lose their employer-based coverage.
Health reform will guarantee that everyone of a similar age will have access to coverage at a similar rate despite any health conditions they may have. With more than 66,000 jobs lost in OC already this year, having health insurance that is not tied to your employer will be a much needed change.
The benefits are also clear for those who don’t have access to health insurance now. In some parts of OC, the rate of uninsured is higher than the state average. In fact, in some areas, almost one in three residents does not have health coverage.
With health reform, these residents will be able to purchase health insurance regardless of any health conditions they may have. The government will provide subsidies for those who are lower-income to ensure affordability.
If health reform realizes high-quality care along with universal coverage and affordability, everyone in our community will win.
CAROL J. GEFFNER
Chief executive
ArpegioHealth, Irvine
OC is a relatively affluent community, yet nearly 300,000 residents rely on Medi-Cal for their health coverage. It has a higher than average rate of uninsurance. With the proposed federal subsidy, more residents will have access to health insurance, which will improve their ability to access medical services. Reform is likely to benefit doctors and hospitals in OC as uninsurance rates decline.
Medicaid will be expanded to cover a broader range of low-income families. At present, UCI Medical Center and Children’s Hospital of Orange County provide much of the county’s indigent care. Expanding Medi-Cal will improve access to care for residents and provide needed support to the safety-net hospitals and clinics in the county.
Turning to healthcare information technology, it’s a cornerstone of all reform efforts and is already funded under the federal stimulus package. Reform will include financial and administrative support for electronic health records and payment incentives to providers who can demonstrate that their care is efficient and improves patient outcomes.
Funding for healthcare information technology will increase access to electronic health record systems and growth of medical technology firms operating in the county.
The continued consolidation of hospitals and broadened affiliations in OC will play a role in consolidation of medical information systems.
There will be a gradual trend toward sharing of health information across hospital-physician groups within the county and statewide.
And health insurance will become easier to obtain if the pre-existing condition requirements are eliminated, further increasing the overall percentage of OC residents who can obtain health insurance in the individual market.
